Gelsinger woos Musk as Intel seeks to drum up Foundry Services business

It's just not economical for Chipzilla to be the factories' only customer these days

Intel is keen to get its Foundry Services strategy off the ground and draw in more customers. With this in mind, it's made a move to cultivate Elon Musk and finalized an agreement with Arm intended to make it easier for chip designers to get their products built.

The Santa Clara chipmaker last week celebrated being awarded $8.5 billion in direct funding through the CHIPS and Science Act plus loans for up to $11 billion more to help subsidize the construction of new semiconductor fabrication plants in the US.

Over the weekend, CEO Pat Gelsinger took to the social media site formerly known as Twitter to issue a public invitation to its owner Musk for a tour of some of Intel's chip manufacturing facilities.

Gelsinger said he was thinking of Musk during the CHIPS Act ceremony, when US President Biden and Secretary of Commerce Gina Raimondo were given a tour of the Intel facility at Chandler in Arizona.

The Intel chief said he was looking forward to giving Musk a personal tour of the company's semiconductor lines, and invited him to follow him so they could discuss the matter privately in direct messages.

This is likely because Musk has control of several high-tech companies that could become customers of Intel's fabrication plants. One is EV maker Tesla, which is developing its own supercomputer named Dojo for training machine learning models for vehicles to beome self-driving.

Intel disclosed more than 18 months ago that it was aiming to separate out the semiconductor foundry side of its business and the design teams that create its own products. This split makes the company's Product division just another customer for Intel Foundry Services, while allowing the latter to seek business from third parties.

Another reason for doing this is that the cost of building a fab capable of producing chips with the most advance process node technology has become so high that it is uneconomical for Intel to use it just for its own chips, as CFO David Zinsner disclosed in an interview at the Morgan Stanley Technology, Media & Telecom Conference earlier this month.

"It's a lot more expensive to build a fab, an EUV [extreme ultraviolet lithography] fab, than it was to do a pre-EUV fab," Zinsner said. "I think it's unlikely that we would have enough volume ourselves to be able to fill the fabs to the level that drives enough of an ROI. So part of it is just necessity. We need more volume, and that's going to have to come from other customers."

In this respect, Intel has already formed an agreement with chip designer Arm. The two have now signed a memorandum of understanding (MoU) that finalizes an Emerging Business Initiative aimed at making it easier for silicon startups to get their Arm-based designs manufactured by Intel.

Under this MoU, the two companies aim to provide essential intellectual property (IP) and manufacturing support, and make available financial assistance for startups too.

"The Emerging Business Initiative provides a path for new companies to leverage leading-edge Arm-based SoCs and Intel Foundry's global manufacturing capabilities to make their ideas real," Intel SVP and general manager of Foundry Services Stuart Pann said in a statement.

This builds on the multigeneration agreement the two announced last year, under which they agreed to collaborate in order to smooth the path for Arm's licensees to get low-power system-on-chip (SoC) devices made using the Intel 18A process node.

At Intel's inaugural Foundry Direct Connect event last month, the chipmaker touted a contract from Microsoft to build chips on its 18A process node, and said it hoped to attract business from others, including Nvidia, Qualcomm, Google, and even arch-rival x86 processor company AMD. ®

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